On Friday market attention will be glued to the US Non-Farm Payrolls release at 13:30 GMT. According to the forecast, the US economy created 231K new jobs in November (slightly more than in October). The figure will be crucial for all the currency pairs as it will impact Fed’s rate hike expectations.

On Thursday EUR/USD has recovered a figure from the multi-month low of 1.2300 as the ECB announced no QE. According to Mario Draghi, ECB could alter stimulus measures in early 2015 if needed (not necessarily in January). Mario Draghi is clearly advocating new stimulus, so the overall picture for EUR/USD remains clearly bearish. On Friday watch the German Factory Orders data.

USD/JPY reached 120.15. The advance was fueled by the initial decline in EUR/USD. The market players are probably taking profit after such big target was hit. Support is at 119.50, 119.10 and 118.60. Resistance is at 120.20 and 121.00.

GBP/USD fell to 1.5640. The Bank of England left monetary policy unchanged. Pound is still above support at 1.5595/85. We expect more consolidation around 1.5675 ahead of the US NFP release.
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EUR/USD hit a new low of 1.2250 on Monday as the ECB member Nowotny warned on weak inflation and growth in euro zone. He echoed the ECB President Draghi, increasing the expectations of a full-scale QE in early 2015. There are not so many events to watch on Tuesday except for the French and German trade data. What's more, European finance ministers will meet in Brussels tomorrow. Tax on financial transaction will be in the centre of discussion. Markets are awaiting for the TLTRO auction that comes on Thursday and remain rather sceptical abour the euro's medium-term prospects. However, for now the 1.2250/00 area remains resistive.

GBP/USD has recovered some ground from the 1.5550 low on Monday. The picture still remains negative for the cable with the Britain's manufacturing production data on the agenda on Tuesday (forecast - downbeat). USD/JPY gave back some ground too after hitting a record high of 121.80 in Asia. According to our forecast, there is room for a correction towards 119 yen in the coming days.

AUD/USD gapped lower on Monday and touched 0.8270 in Asia, but the decline failed to sustain. The markets were disappointed by Chinese trade data: import shrank significantly. On Tuesday watch Australia NAB business confidence index.

Analysts at BNP Paribas recommend selling EUR/USD in the year 2015, targeting 1.1500 in the medium-term.

In their view, monetary policy divergence that drove EUR/USD lower in 2014 should persist in the year 2015. Expectations for the Fed's policy tightening in June conflict with a potential balance sheet expansion by the ECB.
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Last week the markets were focused on the ECB’s TLTRO auction that took place on Thursday. In December European banks took 129 billion of cheap loans. The figure is above the September reading of 83 billion, so the market reaction was mildly positive. However, this is far below the minimum level of 200 billion needed to help the ECB to expand its balance sheet by 1 trillion euros.

As a result, the long-term sentence to the euro has finally been pronounced: euro zone clearly needs a QE program to beat the dangerous deflationary pressure. This is a long-playing euro-bearish factor.

However, in the near term the bullish EUR/USD correction could extend further. Break above the 1.2500 mark would open the way to 1.2600 and then – to the 1.2900 resistance area. We expect the sharp decline with the targets far below the 1.2000 mark to resume from here.

The bullish EUR/USD scenario will be viable only if the US Fed maintains a neutral stance on the next week’s meeting. You should also note that the European banks will be paying back part of the LTRO loans next week. On the one hand, this is a sign of the banking sector’s health. On the other hand, the balance sheet reduction will only add pressure on the ECB to announce more stimulus in January.

As for the euro zone’s economic calendar, watch the December PMI and ZEW economic activity indices on Tuesday: forecasts are upbeat. On Thursday pay attention to the German Ifo Business Climate.
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US dollar firmed versus all the major currencies on Monday as investors await the Fed’s meeting outcome on Wednesday. Given the recent strong US releases, part of market players expect the US monetary authorities to turn more hawkish in December.

EUR/USD holds below the 1.2500 mark as the expectations for the ECB’s QE keep on growing. On Tuesday watch the euro zone’s PMIs and ZEW economic activity indices – forecasts are upbeat. Break above 1.2500 could open the way for a higher rebound towards 1.2600, while support is seen at 1.2350.

GBP/USD fell from 1.5745 down to 1.5630. Watch the UK inflation data on Tuesday – price growth is expected to have slowed further in November. BOE Governor Marc Carney will deliver a speech tomorrow.

AUD/USD hovers near its 4.5-year lows slightly above the 0.8200 mark. This figure acts as a support these days, but the medium-term picture remains bearish. The RBA is scheduled to release its meeting minutes tonight. What’s more, the Aussie could also be influenced by the Chinese HSBC manufacturing PMI tonight (forecast – downbeat).

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EUR/USD: bears pulled to new lows

Tatiana Norkina, an analyst at FBS

Trading results of the last week have been quite disappointing for the bulls - the currency pair was unable to stay in the positive area. After an another bears’ attack prices have fallen under a cloud, breaking the four-hour support just above the 24th shape and reshape the technical picture.

Thus, Ichimoku cloud has changed in the nature of a bear, Tenkan and Kijun lines formed a powerful dead cross, the MACD histogram went under the zero mark, and RSI is on the bottom of the range.

At the same time, Chinkou Span is located in a strong oversold zone, which may indicate a possible corrective recovery couples to Tenkan or Kijun lines. But then we are likely to see a resumption of the downtrend.

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